Introduction

Innovation is an idea or break through approach that can be quite new or it is an expansion to
something that already present in the organization. We can simply define this as something
new that adds the value of the organization. In this report I am dealing with the innovations in
the Airline industry, and the organization that chooses is South West Airline. Here I am
discussing about how the innovation can be manage, evaluation of the implementation
mechanism of innovation, the advantages of innovation in southwest airlines and also
identifies the role managers in the innovation.

Innovation is destructive and creative as well as inevitable. The development and research
managers are responsible for how to manage their function, for example marketing managers
are involved in introducing new products (Ettlie J, 2006). The management of the innovation
are concerned with the industry in which the organization operates, in this report I chose the
industry as the airline industry and the organization is Southwest Airline. Innovation is
considered to be vital component for the success of a business. Innovation ultimately keeps
the organization on top of their competitors.

Airline industry – world wide overview

International Airline industry is an inevitable part of the making of global economy which
offers services to almost all part of the earth. Airlines industries are very important in the
global economy as it itself is a huge economic factor. Moreover it creates impacts on other
industries like tourism as well as aircraft manufacturing.
As advancing through the technological developments, the aircraft industry mugged great
innovations. The introduction of JET aeroplanes in 1950s for using commercially was an
example of technological innovation. Another example was the introduction of jumbo-jets;
the big aero-planes in 70s.On the other hand in 1970s, the air services became heavily
regulated all over the world. Governments tactics as well as technological innovations won
the race and took antecedence over profitability. And it was the period that the cost efficiency
of US airlines has been questioned up. During this period, the competitive behaviour and the
profitability had become the two major problems in the airline management field. The airline
disorders has became very common in the industrialized world, which affects domestic as
well as international airline industry.

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 The Europe had been taken a powerful stand for building good regulatory constraints in
order to create healthy airline business environment.Eventhough the regulatory constraints
were not prominent, and it enhanced the competition among market players. Also it created a
worst condition that the airlines possessed passive competitive characteristics in order to keep
up their current market position. The competition rules have an important role in preventing
regulatory barriers and are substituted by passive competitive agreements like price
determination and market sharing among airlines. On contrary to that, competition rules also
brings up the required amount of liberalisation which make sure competitive souk.
At present there are 2000 airlines which operates about 23,000 aircrafts under the global
airline industry. And it facilitates service to more than 3700 airports. Almost twenty eight
million chartered flight flew under world airlines in the year 2006, which carried almost two
billion passemgers.In the past 3 decades the world air travel had shown an average increase
of 5% in each year. And the graph tells that these fluctuations are resulting from the
variations in economic conditions in different zones of world. In the historical perspectives,
the air travel growth is the doubled value of GDP. The expecting economic growth in the
upcoming 15 years says that the global air travel will be the double of total air travel.
According to the calculations, the United States airline industry operates about 11 million
flights per year using 100 certified passenger airlines. And it carries approximately one by
third of total world's air traffic. That means the airlines enplaned seven fourty five million
passengers in the year of 2006.The airlines claims that they manage almost 5,45,000 staffs ,
about 80 hundred aircrafts and 31 thousand flights a day with the total revenue of $160
billion. The airline industry posses a remarkable economic impact. And airline department
also creates impact on other industries which in turn supplements the economic impact. The
recent calculation states that commercial aviation supplements 8% of US GDP.
SOUTHWEST AIRLINES.
Thirty eight years past, two intelligent business man namely Herb Kelleher and Rollin
king together planned to start a completely distinct airline service. Given importance to some
special features.To be more exact they designed some criterions which should they want to
ensure in their airline services. The important conditions among that are, very low and
reasonable ticket fare, availability of flights on the right time and keep the timings, and to
provide travellers very good services. They concluded that if they triumphed in fulfilling the
above three conditions the peoples obviously Choose their airlines. They started the airlines
namely Texas. And now it becomes one of the largest airlines in America. At present the
south west airlines have services across 66 large cities and it carries almost 100 million

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passengers per year. South west airlines have a variety of flights out of which some are very
prominent. For example one star one, silver-one, California-one, Arizona-one, Maryland-one,
new-Mexico-one, triple-crown-one, Nevada-one, slam-dunk-one etc.The above depicted each
flight has its own special features and special purpose and is the symbol of the wonderful
achievement made by the southwest airlines.
When the customer satisfaction has been began to tracked, the estimate states that the
south west airlines has been marked as the better service provider.That means there was only
very few complaints against the south west airlines. As it so, some other airlines started to
implement south west tactics in their services. And the south west had been considered as the
admirable organisation. All these reasons together made south west airlines the hometown
airline of each and every city.

Southwest airlines flying high with innovations:

Southwest airlines keep up their stand among the first twenty innovators in northern America.
Influential companies like Google, The Intel Corporation, Hewlett-Packard &co, Microsoft
Corporation, Dell, eBay and Southwest airlines shaped our lives through various innovation
techniques. The southwest airlines had achieved an increase of $1700 million in revenue in
the 2 years period (2003-2005). But it didn't cope up with their expectations of $3000 million
increase in 2006 as the southwest stock was down by 3% in that year (Sunoo, 1995).

In 2007 the stock rate increased by 2% and had expected to go forward in the upcoming
years. As there occurred a fell in oil price, holiday travel as well as sharing purchase program
had became common, and is considered as a business growth which is a result of new
innovation techniques. The Fortune and Barron rated southwest good after analyzing the
successful advancement achieved in 2007.

Southwest airlines operate approximately 3200 flights per day and provide services across 63
large cities of 32 provinces. They also manages almost 32000 staff worldwide and they
claims that there are only negligible complaints from passengers even they enplane large
number of passengers. Southwest airlines also declares they provides the best service and the
cheep cost over all. If explained they provide seats covered with leather, with blankets and
with enough leg space, good refreshment foods and drinks throughout the journey in all their
flights. (Sydney Herald, 2004).

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The method of developing a new idea and implementing that successfully in market can be
termed as innovation. Apart from the matters that are it a large organization, or a public
sector or a fresh firm, innovation is an entrepreneurial act. Either it must be an amendment on
existing thing or modernization of new things. Computerized workplaces are examples of
application of innovations in the technological field. It is not that easy to introduce new ideas
and changes in business field as finding the areas of improvement, because the manger
should be that efficient to make the staff comfortable with new tactics and amendments. The
manager is responsible for the duty of managing the new problems and disorders created by
the new ideas (Awad, E & Ghaziri, H. M., 2003).

Managing innovation

Every organization performs innovation. And managing innovation has different steps

1. Creation of new ideas

It is not an easy task to create a new idea .If the colleagues are not co-operative ,the
implantation would be difficult as well. Everyone should respect others ideas and
thoughts. Everyone should be given a chance to perform, and encouraged well. And
others must provide support if they bid. We should follow the policy that "failure is
the stepping stone towards success" and remember every fault makes us study
something new. And that is the success of southwest airlines as they encourage staffs
and accept new ideas from them ,now they are running towards the first position
among American companies.

2. Self-Assessment
It is very important to understand own abilities as well as limitations. Then
only we can improve perfectly. Likewise the better way to assess a company is
to ask to own staffs. Giving full freedom to the employees for expressing their
opinions may lead a company to achieve positions which is beyond their
expectations. It was a great improvement of southwest company after they
made amendments after seeking opinion from their employees.
3. Review
Review is a very important task in managing innovations. It not only help to prevent
the failure of a project but also helps to keep up the companies reputation. We can
analyse the feedback and through we can understand the success of a project, but if

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 the feedback may bad it create an adverse effect. So it is better to review as much as
we can by making own feed back in order to avoid a big failure.
4. Commercialization and getting sponsor
Looking for a good sponsor is the next task after the invention of a successful idea, so
that we can commercialize the ideas. For interacting with new customers and to
collect response, southwest airlines spared a lot of time. And it helped them to know
the possibilities of innovations that they have to bring into the market. The perfect
customer service and good employee dealing is the first innovation of every company.
If they won in this then the rest is very easy that to compete in the market. For driving
the innovations smoothly southwest airlines chooses the innovation management
software Spigit, the leader, which helps airlines to analyse employees according to
their views and to measure employee's ideas. It also helps in the way of implementing
this idea in its best way.

Top Ten Innovations at Southwest Airlines

1. Low Fare Sales

The south west airlines gives better low flight fares compared to the other airlines at all times
in a year especially around the peak travel seasons and the holiday. At the same time the
other airlines are manly focusing on the peak seasons so that they can maximise their profits.
The following are some examples of south west Airline's low fares. $49 for the one way fare
in between the travelling between Washington and Baltimore.

2. New non stop services

Recently the South West Airline had introduced 33 new non stop flights that started service
in 26 cities across the country. The brand new non stop service includes in between
Cleveland and Orlando, between Birmingham and Dallas Love Field and also in between
Reno and San Diego. This airline also started earlier non stop services in between Orlando
and Metro, In addition to this they also provide services in between Orlando and Menver.
Southwest airlines give their travellers the freedom of travelling non stop at an economical
price.

According to Gary Kelly "The south west airline is like an efficiency machine, and they will
always try to make use of their resources effectively. Through efficiency, innovation and

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optimization south West airlines are adding these flights, which will ensure their commitment
towards the customers, and this will help the organization to grow and develop their services
and thus helps in achieving the organizational goals.

3. New Destinations

As a part of starting new destinations in 2006, south west Airline started giving direct
services from Washington and Denver Airports. They also started servicing to Denver in
January 2006, in addition to this they also offers 32 daily non stop departures to 9 cities
across the country and also with connecting and direct services to an extra 44 cities. Their
services to Denver found a huge hit for their travellers and the management of the Airline
expected that it become one of the top ten airports for the south west business. In October
2010, they started servicing in Washington Dulles international Airport. Previously they do
service only in Baltimore airports.

4. Boarding process re- engineering

Over the last thirty years the main key of the South west Airline's business success is their
innovative efficiency in the boarding process. There are some other competitive airlines they
started following the way of south west airlines in quite rudimentary and boarding cattle and
reticulated the entire process. By reducing their aircraft time on the ground, the South west
airline had proved that they can maintain an enviable on time record at an affordable cost in
compare to the other airlines. It has been seeing that all the travellers are happy with the
service of the south West airlines. Southwest airline also wants to calculate the combined
advantages of assigned seating, efficiency and on time performance and customer satisfaction
on its business model. According to Gary Kelly " For the last 30 years the South west
Airlines, Before implementing a change they have to make sure that they are studied well
about all the possibilities and the aspects of the change that going to implement."

5. Aircraft Saving

The organization is looking for several new ways in order to reduce the operating cost as they
acquire new aircrafts for newer services and destinations. The airline is also started make use
of used aircrafts for additional 2006, and also in the third quarter they acquired one 737- 700.
The main focus of the south west airline is to give low fares and also provide great safety for
their passengers. They reduce the cost by make use of the used aircrafts and this will help to
achieve their 15 percentages earnings growth target for the year.

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 6. Bottomline

There are mainly 18 innovators in the Onnovators index and among this South West Airlines
holds one of the top innovators. This airline is soaring high by creating double digit earnings
growth, consistently showing profits, and also over the last several years producing several
new innovations. Ding is a technology innovation of the South West Airline that bring the
organization much closer to their travellers who gives the mechanical advantage by
messaging and communication services in order to buy more tickets. The online website
Southwest.com is found to be one of the best and easiest ways of ticket reservation in today's
market. It is expected that the strong growth and run of innovation of the South West Airlines
will continue in 2010 and beyond.

7. New Vacation Packages

Recently in the list of the vacation packages the South west airlines added Hawaii vacations
and these offers are mainly focused on the families. They also made partnership with ATA
airlines when they realised that most of their holiday travellers are like to choose Hawaii as
their destination. This helps the organization in offering better schemes for the holiday
packages to Hawaii Islands. In addition to this they also offers another vacation package like
an air- inclusive vacation packages to the Hawaii's big island and a land only package to
Kauai. According to the Vice president of South West Airlines, Rich Basen "The south West
Airlines are excited to develop their product by offering holiday packages to Hawaii".

South West airline is one of the main Airlines in US and these are mainly operating based on
Dallas Texas. Among the category of the low cost airline south west airline holds the position
of best market leader. This airline is the big, beautiful and the best in the world at what it
does (Short haul, high frequency, low cost flights). The south west airline is mainly based on
the US airline market. There are some rumours had developed that SWA going to start their
service across the world, and the management of the airline believes that those people who
needs their low cost flights have to wait

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In order to make an organization more effective and successful creativity and innovation are
the main techniques. In the south west airline the innovators needs to give a constant effort so
that they can develop and improve the innovation, and this will help the organization in
achieving the organizational goals. In all the areas of a budget airline travel the South west
airline tries to give the perfect values for their passengers.

References

1. http://www.southwest.com/about_swa/
2. http://www.soopertutorials.com/business/strategic-management/1852-southwest-
airlines-swot-analysis.html
3. Smith, G, (2004). "An evaluation of the corporate culture of southwest Airlines",
measuring business Excellence. Vol 8 pp, 26-33
4. Citigroup Analyst Report: Andrew, Light, Southwest Airlines Co (LUV) Fact sheets,
2006.
5. Awad, E & Ghaziri, H. M. (2003) Knowledge Management (Ed edn). Prentice Hall
Harvard Business Review on Innovation (2001). Harvard Business School Press

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 6. Adams, j (2005) " analyze your company using SWOTs, supply house times, vol, 48,
pp. 26- 28
7. http://www.arichall.com/academic/papers/om5210-hrm.pdf
8. http://www.soopertutorials.com/business/strategic-management/1852-southwest-
airlines-swot-analysis.html
9. http://www.allbusiness.com/technology/562048-1.html
10. Ettlie, J (2006) Managing Innovation (2nd edn) Butter worth-Heinemann Elsevier
11. http://www.ipm-marketing.co.uk/Innovation%20Management.htm

Bibliography

1. The management of innovation by Tom Burns, George Macpherson Stalker, Oxford

University press, 2001.
2. Managing innovation: New technology, by John .E volume 10, 2nd edition, 2006.
3. Turban, E., McLean, E. & Wetherbe, J. (2008) Information Technology For
Management: Transforming Organisations In The Digital Economy (6th edn.) John
Wiley and Sons, New York
4. Gittell, J. H. "The Southwest Airlines Way: Using the Power of Relationships to
Achieve High performance". McGraw- Hill. 2003
5. strategic Management Theory: An Integrated Approach By Charles Hill

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